KUALA LUMPUR: Any signs of a recovery in the global economy have disappeared, according to the largest ever survey of finance professionals to be undertaken by ACCA (the Association of Chartered Certified Accountants).
It said that three quarters of the 2,873 professionals who took part in the Global Economic Conditions Survey between Aug 19 and Sept 7, 2011 thought global economic conditions were deteriorating or stagnating.
Nearly half, (49%) had lost confidence in the economic prospects of their own organizations, while a similar percentage (45%) thought their governments were not dealing correctly with current economic challenges, it said in a statement Monday, Oct 17.
ACCA said much of the drop in confidence, especially in Europe and the Asia-Pacific region, was down to a flow of bad news rather than the economic fundamentals, which have deteriorated only slightly in the past three months.
ACCA senior policy advisor and survey editor Manos Schizas said the weakening in demand and deteriorating access to finance reported by accountants were not sharp enough to justify the strong negative sentiment which they expressed.
But after taking into account the effects that fear for the future will have on their views, the evidence still pointed to falling economic activity in the developed nations and a sharp slowdown in emerging economies, he said.
Schizas said the drop in confidence could be seen as a result of people waking up to trends which have accumulated for the past year or more.
'Globally, demand has proven to be too weak to sustain reliable growth, investment refuses to pick up and inflation remains high.
'And on top of everything else, it's still unclear whether the sovereign debt crisis in Europe can be contained, or indeed what it will mean if it cannot,' he said.
Although all regions except the Middle East were now in negative territory in terms of both economic and business confidence, ACCA said it was particularly conscious of developments in the Asia-Pacific region, which once led the world into recovery.
'After falling steadily for more than a year, confidence levels in the region are now comparable to, if not lower than, those in Europe, and economies which had undertaken more international trade (such as Singapore or Hong Kong) appear to be the worst hit,' it said.
Meanwhile, the ACCA said only 8% of the sample of the 222 finance professionals who responded in Malaysia reported confidence gains, down from 20% in the last quarter, and 77% (up from 54%) believe the global economy is either stagnating or deteriorating.
ACCA Malaysia country head Jennifer Lopez said this pessimistic outlook on the future was understandable given how inter-connected the current world economy was.
She said the crisis was far from over in the West, with some economies predicted to experience unprecedented catastrophes.
'Having led the global recovery in 2010, there are high expectations that Asia will continue to do so.
'Unfortunately, a lot about the economy is psychological and the gloom and doom sentiment in the West has clearly made an impact in Malaysia,' she said.
Lopez said this was reflected in the findings which reported that investment was down sharply, and every last type of business opportunity examined by the GECS appeared to have become rarer.
'That said, the report reveals that inflation appears to be receding and fewer organisations are going out of business.
'Respondents expect government spending to rise in the medium term but also feel that with growth slowing to a halt even these higher levels of spending may be unsustainable,' she said.
This report coupled with the recent Budget announcement by the prime minister was timely as the findings would definitely make for an interesting discussion during the ACCA Annual Conference 2011 themed Moving Malaysia Towards Becoming A Global Economic Powerhouse, to be held on Oct 20..
'The established trends in the global economy have reached a tipping point, but ACCA believes that this condition calls for a coordinated global response to face the problem.
'Now more than ever, it is important to look beyond the extreme sentiments and focus on the economic fundamentals,' said Lopez.
It said that three quarters of the 2,873 professionals who took part in the Global Economic Conditions Survey between Aug 19 and Sept 7, 2011 thought global economic conditions were deteriorating or stagnating.
Nearly half, (49%) had lost confidence in the economic prospects of their own organizations, while a similar percentage (45%) thought their governments were not dealing correctly with current economic challenges, it said in a statement Monday, Oct 17.
ACCA said much of the drop in confidence, especially in Europe and the Asia-Pacific region, was down to a flow of bad news rather than the economic fundamentals, which have deteriorated only slightly in the past three months.
ACCA senior policy advisor and survey editor Manos Schizas said the weakening in demand and deteriorating access to finance reported by accountants were not sharp enough to justify the strong negative sentiment which they expressed.
But after taking into account the effects that fear for the future will have on their views, the evidence still pointed to falling economic activity in the developed nations and a sharp slowdown in emerging economies, he said.
Schizas said the drop in confidence could be seen as a result of people waking up to trends which have accumulated for the past year or more.
'Globally, demand has proven to be too weak to sustain reliable growth, investment refuses to pick up and inflation remains high.
'And on top of everything else, it's still unclear whether the sovereign debt crisis in Europe can be contained, or indeed what it will mean if it cannot,' he said.
Although all regions except the Middle East were now in negative territory in terms of both economic and business confidence, ACCA said it was particularly conscious of developments in the Asia-Pacific region, which once led the world into recovery.
'After falling steadily for more than a year, confidence levels in the region are now comparable to, if not lower than, those in Europe, and economies which had undertaken more international trade (such as Singapore or Hong Kong) appear to be the worst hit,' it said.
Meanwhile, the ACCA said only 8% of the sample of the 222 finance professionals who responded in Malaysia reported confidence gains, down from 20% in the last quarter, and 77% (up from 54%) believe the global economy is either stagnating or deteriorating.
ACCA Malaysia country head Jennifer Lopez said this pessimistic outlook on the future was understandable given how inter-connected the current world economy was.
She said the crisis was far from over in the West, with some economies predicted to experience unprecedented catastrophes.
'Having led the global recovery in 2010, there are high expectations that Asia will continue to do so.
'Unfortunately, a lot about the economy is psychological and the gloom and doom sentiment in the West has clearly made an impact in Malaysia,' she said.
Lopez said this was reflected in the findings which reported that investment was down sharply, and every last type of business opportunity examined by the GECS appeared to have become rarer.
'That said, the report reveals that inflation appears to be receding and fewer organisations are going out of business.
'Respondents expect government spending to rise in the medium term but also feel that with growth slowing to a halt even these higher levels of spending may be unsustainable,' she said.
This report coupled with the recent Budget announcement by the prime minister was timely as the findings would definitely make for an interesting discussion during the ACCA Annual Conference 2011 themed Moving Malaysia Towards Becoming A Global Economic Powerhouse, to be held on Oct 20..
'The established trends in the global economy have reached a tipping point, but ACCA believes that this condition calls for a coordinated global response to face the problem.
'Now more than ever, it is important to look beyond the extreme sentiments and focus on the economic fundamentals,' said Lopez.
No comments:
Post a Comment